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American Union Insurance Company Will Commence Cash Tender Offer

30 August 2000

American Union Insurance Company Will Commence Cash Tender Offer for All the Common Stock of Meridian Insurance Group, Inc., $20 Per Share Price Represents 57 % Premium

    BLOOMINGTON, Ill.--Aug. 30, 2000--Gregory M. Shepard, Chairman and President of American Union Insurance Company today announced a cash tender offer for all the common stock of Meridian Insurance Group, Inc. of Indianapolis, Indiana . American Union's offer will commence tomorrow, Thursday. The price of $20 per share, net to the seller in cash, represents a premium of 57 percent above Tuesday's closing price of $12.75 on the NASDAQ.
    Shepard said, "Meridian and American Union make a good fit--positive for the policyholders, employees, management and agents of both companies. American Union with only 6 employees located in Bloomington, Illinois can easily meld its property and casualty operations with Meridian's in Indianapolis. We recognize Meridian's operating record.
    Shepard said he would pledge to maintain the aggregate employment of the current Meridian operations and planned to add more jobs in the Indianapolis area over the next few years.
    The offering documents disclose that there have been contacts between representatives of American Union and Meridian relative to a possible business combination dating back to April of this year. In a letter to Meridian Chairman Ramon L. Humke and Meridian CEO Norma J. Oman, alerting them to the upcoming offer, Shepard said those efforts aimed at negotiation had been "consistently frustrated." " The compelling business logic" of the transaction moved American Union to act, said Shepard.
    Shepard also said: "for your management and employees, there will be the opportunity to reap the financial rewards of their contribution to Meridian's success by tendering their shares. In addition, it is our intention to create an Employee Stock Ownership Plan, after the closing of the merger, that will own up to 10% of the Company's outstanding shares."
    Meridian Insurance Group's quarterly report for the first six months of 2000 indicated that as of June 30, 2000 there were 7,852,411 outstanding common shares. Up to 1,285,425 common shares are issuable under various incentive plans.
    The offer is conditioned upon, among other things, (1) there being validly tendered and not properly withdrawn prior to the expiration of the offer a number of common shares which, together with the 1,588,400 common shares (20.23% of the June 30, 2000 outstanding) owned by Shepard, constitute at least 50.1% of the voting securities of Meridian Insurance Group, Inc. outstanding or issuable under the company's stock option plans, (2) Meridian's redemption of its preferred share purchase rights, (3) American Union being satisfied, in its sole discretion, that the provisions of the Indiana Business Combination chapter are inapplicable to the Offer and the Proposed Merger, (4) American Union being satisfied, in its sole discretion, that the provisions of the Indiana Control Share Acquisitions chapter are inapplicable to the proposed merger described herein, (5) American Union having obtained all insurance regulatory approvals necessary for their acquisition of control of Meridian and its insurance subsidiaries and affiliates on terms and conditions satisfactory to American Union, in its sole discretion, and (6) American Union obtaining financing.
    The offer and its withdrawal rights will expire at 5:00 P.M., New York City time, on September 29, 2000, unless the offer is extended. The offer is being made through a wholly owned subsidiary of American Union.
    The Depositary and Information Agent for the offer is ChaseMellon Shareholder Services, L.L.C., 44 Wall Street, 7th Floor, New York, New York, 10005, Call Toll-Free (888) 451-6741.